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Trade setup for Nov 4: As D-Street digests Fed action, Nifty50 may test 18,200 again soon

Trade setup for Nov 4: As D-Street digests Fed action, Nifty50 may test 18,200 again soon

Trade setup for Nov 4: As D-Street digests Fed action, Nifty50 may test 18,200 again soon
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By Sandeep Singh  Nov 4, 2022 7:35 AM IST (Updated)

Trade setup for Friday, November 4: Experts say the absence of sharp weakness at crucial resistance near 18,200 is a good sign. Here's what the technical charts suggest.

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Indian equity benchmarks slipped into the red amid a global sell-off after the Fed delivered a hike of 75 basis points in the benchmark interest rate along expected lines but Chair Jerome Powell's signal at more increases than anticipated earlier spooked investors.

Gains in oil & gas and FMCG shares kept the downside in both headline indices in check.
What do the charts suggest for Dalal Street?
The Nifty50 has formed a small positive candle on the daily chart with a minor upper shadow, indicating a buy-on-dips opportunity at the highs, according to Nagaraj Shetti, Technical Research Analyst at HDFC Securities. 
The absence of sharp weakness at the crucial resistance level of 18,200 is a sign of resilience in the market, he said.
41,500 a make-or-break level for banking index
"The Nifty Bank has held support at 40,800 with strong buying from lower levels," said Kunal Shah, Senior Technical and Derivatives Analyst at LKP Securities.
"A move above immediate resistance at 41,500 in the banking index will lead to a rally towards 43,000. PSU banking and HDFC Bank stocks can participate in this rally," he said.
Here are key things to know about the market ahead of the November 4 session:
SGX Nifty
On Friday, Singapore Exchange (SGX) futures — an early indicator of the Nifty index — we last up 3.5 points at 18,118 ahead of the opening bell on Dalal Street, having moved within a range of 48 points around the flatline earlier in the day.
Equities in other Asian markets began Friday on a positive note, shrugging off a weak handover from Wall Street as US economic data did little to support optimism the Fed may reduce the pace of hikes in benchmark interest rates anytime soon. MSCI's broadest index of Asia Pacific shares outside Japan was up 1.5 percent at the last count.
Hong Kong's Hang Seng was up four percent and China's Shanghai Composite 1.4 percent, but Japan's Nikkei 225 down two percent.
S&P 500 futures were flat. On Thursday, the S&P 500 fell 1.1 percent, the Dow Jones 0.5 percent and the Nasdaq Composite 1.7 percent.
What to expect on Dalal Street
HDFC Securities' Shetti expects the market to remain choppy in the next 1-2 sessions before bouncing back from the lows.
He sees immediate support around 17,950-17,900 levels.
Period (No. of sessions)Nifty50Nifty Bank
518,08041,164.1
1018,105.241,237.8
2018,088.841,317.7
5017,88741,236.3
10017,639.940,570.6
20017,371.239,630.1
Key levels to watch out for
The maximum call open interest is accumulated at the strike price of 18,100, with 2.1 lakh contracts, and the next highest at 18,200, with 1.5 lakh contracts, according to provisional exchange data. The maximum put open interest is at 18,000, with more than two lakh contracts, and at 17,700 and 17,500, with 1.2 lakh each.
This suggests immediate resistance at 18,100 and a strong base at the 18,000 mark.
FII/DII activity
Foreign institutional investors (FIIs) have remained net purchasers of Indian shares so far this month, according to provisional exchange data.
Long build-up
Here are five stocks that saw an increase in open interest as well as price:
StockCurrent OICMPPrice change (%)OI change (%)
COROMANDEL1,501,5001,0103.78%62.56%
DALBHARAT1,317,5001,664.504.07%17.80%
RAIN11,256,000171.91.30%17.41%
VEDL36,801,650305.252.02%14.63%
TITAN5,787,7502,785.601.39%9.42%
Long unwinding
StockCurrent OICMPPrice change (%)OI change (%)
LICHSGFIN19,292,000362-0.15%-8.92%
MFSL2,075,450722.7-0.09%-5.48%
UBL976,0001,664.45-0.96%-4.67%
HCLTECH14,476,0001,047.70-0.25%-2.31%
GUJGASLTD4,906,250518.65-0.87%-1.81%
(Increase in price and decrease in open interest)
Short covering
StockCurrent OICMPPrice change (%)OI change (%)
PNB249,968,00041.555.46%-5.66%
INDUSTOWER17,715,600188.91.75%-4.96%
SRTRANSFIN3,636,0001,239.052.74%-4.67%
BAJAJ-AUTO1,449,5003,785.051.20%-4.62%
RBLBANK47,620,000135.751.12%-4.51%
(Increase in price and decrease in open interest)
Short build-up
StockCurrent OICMPPrice change (%)OI change (%)
VOLTAS3,917,000863.65-5.62%38.33%
BALKRISIND2,084,1001,900.95-3.16%7.93%
POLYCAB796,2002,751-2.16%7.91%
ESCORTS1,239,4252,004.50-0.09%6.90%
IRCTC12,387,375749.6-0.70%6.71%
(Decrease in price and increase in open interest)
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